Asked by Teguh Daeli on Jul 13, 2024
Verified
All competitive firms earn zero economic profit in both the short run and the long run.
Economic Profit
The difference between the total revenue earned by a business and the total opportunity costs of all resources used in the production.
Competitive Firms
Companies that operate in a market where there are many buyers and sellers participating with minimal restrictions, leading to competitive prices and product offerings.
- Comprehend the circumstances resulting in no long-term economic profit in perfectly competitive markets.
Verified Answer
JL
Jersey LegendsJul 19, 2024
Final Answer :
False
Explanation :
In the short run, competitive firms can earn positive economic profits. However, in the long run, the entry of new firms into the market drives economic profits to zero due to increased competition and market supply adjustments.
Learning Objectives
- Comprehend the circumstances resulting in no long-term economic profit in perfectly competitive markets.
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